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JPMorgan is anything but a bellwether

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Bob Moon: So after months of hopeful anticipation — or maybe high anxiety — the Dow has crossed back into the magic five-digit range. It was nudged over that psychological hurdle today in large part by JPMorgan-Chase. The bank posted its biggest profits in more than a year: $3.6 billion for the third quarter. Impressive to be sure. But take a closer look, and you’ll see the stellar figures aren’t across the board. As Marketplace’s Alisa Roth reports, that’s what we’re seeing in the rest of the economy, too.

ALISA ROTH: More than half of JPMorgan’s total profits for the quarter come from one division: investment banking. The division brought in $1.92 billion. That’s 85 percent more than last year.

Stuart Plesser follows the banking industry for Standard and Poors.

STUART PLESSER: It was a combination of strong investment banking fees and also trading revenue combined with their ability to mark up some of the securities that were previously marked down.

Plesser says there’s been plenty of activity on Wall Street. And investment banks should be able to keep making money.

PLESSER: As long as interest rates are very low as they are now, the cost of capital is very low. There are a lot of ways for them to make money off that low cost of capital.

So much for Wall Street. But the parts of the bank that do business with the rest of America look very different.

The mortgage and consumer banking division made a measly $7 million this quarter. And its credit cards lost $700 million.

Joel Naroff is an economist. He says the numbers reflect what’s happening in the real world. People are still losing jobs. They’re having trouble paying their mortgages. And they’re nervous.

JOEL NAROFF: The consumer’s just starting the process of spending again. But they’re not out there shopping till they drop. And I think any company that’s associated with consumer spending is going to see that in their numbers.

That’s OK with JPMorgan’s CEO, Jamie Dimon. He says the consumer side of things is stabilizing. Though he’s not ready to call it a trend yet.
And those record profits on the Wall Street side? He says shareholders shouldn’t expect them every quarter, as more banks get back into the game.

In New York, I’m Alisa Roth for Marketplace.

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